Could Datadog's TAM Reach $62B — Maybe $70B? Yes, But It Depends On This: Analyst

Shares of Datadog Inc DDOG spiked during Thursday’s early trading session.

Plans to add security and developer experience “rounds out” the company’s cloud native observability platform, according to Cantor Fitzgerald analyst Jonathan Ruykhaver, who initiated coverage of Datadog with an Overweight rating and a price target of $95.

There has been significant consolidation in the cybersecurity space and the same theme “holds true in observability,” Ruykhaver said in the initiation note.

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“Datadog presented a healthy TAM (total addressable market) forecast of 10.3% CAGR to $62 billion from 2021 to 2026E focusing only on the core observability,” the analyst wrote. “We believe if we add on the incremental cloud security opportunity, the potential TAM may be well into the $70B mark by 2026E."

If cloud migration "stays healthy and digital transformation doesn't slow down substantially," achieving Datadog’s forecasted $62 billion target by 2026 is reasonable, Ruykhaver explains.

DDOG Price Action: Shares of Datadog had risen by 2.42% to $72.46 at the time of publication Thursday.

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